"Duopoly Competition with Competitor Partial Ownership"

31-07-2010

Duarte Brito, Luís Cabral & Hélder Vasconcelos

​Owning a share of a competitor's stock lessens the degree of oligopoly competition. In this paper, we explore this theme by considering different forms of ownership (voting and non-voting shares) as well as different divestiture options. Among other results, we show that turning voting shares into non-voting shares increases consumer surplus; and selling the voting shares to a large shareholder is better than selling it to small shareholders. Perhaps more surprisingly, we provide conditions such that a partial sale of voting shares is worse than turning those shares into non-voting shares.